Congress for 2024, and thank you for presenting at the Aegis 2024 virtual conference. Thank you, everyone. Have a good day. The recording has stopped. Up next, we have NewLake Capital Partners that will begin in 1 minute. In fact, Anthony, how are you? I'm well, thank you. How are you? Good, thanks. Good. Thank you for joining us. If you like. Thanks for having us. Yeah, let me just make sure that we record your presentation so you can use it at a later date. I'll do the quick intro. Sounds great. This meeting is being recorded. Good afternoon, everybody. Welcome to the Aegis 2024 virtual conference. Up next to present, we have NewLake Capital Partners, trades on the NASDAQ under the ticker symbol NLCP. We have Anthony Coniglio. Is that how you pronounce it? Yes, very good. Coniglio, thank you. Welcome. Thank you. Thank you for having us here today. We appreciate everybody's time spending with us. Let me unshare my screen for a minute. Bear with me. And so again, thanks, everybody, for joining us this afternoon. What I want to do for you today is talk to you a little bit about NewLake. We're a net lease REIT focused exclusively on the cannabis industry. And I think what you'll find today is that we're a company that has a management team that's really uniquely qualified to invest in this burgeoning market that is the cannabis industry. We've also been able to leverage our early mover advantage to build scale and to assemble a portfolio that has a wide moat with very limited competition. Over the past five years, that quality portfolio of cannabis properties has weathered arguably the most difficult period in the cannabis industry. With an unlevered balance sheet today, strong liquidity and very strong cash flow, and meaningful capital availability, I think you'll see that we're positioned to build upon that success and continue to weather this difficult period and deliver outsized returns for our investors. Our objective here today is that by the end of this discussion, hopefully you're going to see that the quality of our assets, the quality of our assets, and the opportunity for continued growth, as well as understanding why we're undervalued versus some of our comps. You'll understand that it's about not fundamentals related to our business, but our issues that we can have addressed and can address to narrow that valuation gap. It's an exciting opportunity. If you'll allow me 20 seconds to pull up our presentation, we will get going. I thought it had shared. Begin. James, if you can confirm that you can see the presentation. Yeah, if you just double-click to enter the full-screen mode, I think yep, there we go. Perfect. Excellent. Safe Harbor Statement, of course, if you're having trouble sleeping tonight, you're welcome to come back and read our Safe Harbor Statement. And so I talked about the key highlights hopefully you'll hear today, and I'll move through this pretty quickly so we can get to Q&A. This team that we assemble, this business really isn't just about real estate. And you'll hear me talk about the different skills necessary to be successful in this industry. Obviously, cannabis I shouldn't say obviously. Obviously for us. But hopefully what you'll get out of this is that cannabis is indeed a very high-growth industry that we're funding into. We have had a scale and early mover advantage having been around this industry for five years. And I know that some of you are saying, "Wow, five years is not very long." But I could tell you in this cannabis industry and specifically providing capital to the cannabis industry, we are considered one of the veterans. You'll hear me talk about our exceptional portfolio and the performance of our portfolio, again, through this very difficult period for the cannabis industry. And then, of course, our financial position, unlevered balance sheet with significant capacity available to fund and fuel future growth for the company. So very quickly, high level, NewLake Capital Partners, we have 32 properties across 12 states with 13 different operators. We were founded over five years ago. We are today 100% leased, and we've been collecting 100% of our rent over the past couple of quarters. That's important because all of our capital is being put to work for investors and generating return. We had an AFFO payout ratio for the first quarter of 2024 at 79%. For those of you not familiar with real estate investment trusts or REITs, AFFO is a very key metric for us. It really is the measure of our free cash flow for our business. As a REIT, we're required to pay out by statute, by law, a certain amount of our net income. You usually look at it as a relative to an AFFO payout ratio. We guide to 80%-90% of our AFFO to be paid out through our quarterly dividend. In Q1, we paid out 79%. In Q4 last year, it was a 78% payout ratio. So really a strong retention of capital, but also meaningful room to grow in the future on the dividend should our board decide that. This year says 31 properties. It's because it was as of the end of the first quarter. I should note our earnings were announced earlier today, and we'll go over some of that. But we announced yesterday a new property in the transaction, another $16 million investment for a cannabis cultivation facility in Connecticut. The weighted average yield across our portfolio is almost 12%. We have a long duration with a remaining weighted average lease term of over 14 years. And you could see here that at the end of the first quarter, we only had $4 million of debt outstanding on our $90 million revolving credit facility. And I would note that our revolving credit facility is fixed rate for another year at 5.65%. And yes, it's fixed rate for another year at 5.65%. And then thereafter, we'll float for the last couple of years. Our maturity is in 2027, and our floating rate is prime plus 1%. So still with a weighted average yield of nearly 12%, plenty of spread in there to execute more transactions, utilize that line, and provide incremental revenue, earnings, and AFFO to grow for our dividend in the future. You can see from a growth perspective that we have grown significantly since our IPO in terms of the dividend that we've paid out to our investors. And so yes, 71% since IPO. More recently, since October, since our October quarter excuse me, our September quarter end, third quarter last year, we've raised our dividend 5%. We raised in the fourth quarter and again in the first quarter. So I won't take you through the bios because you could all read it. But what I want to emphasize here is that when we looked at this business at inception back in 2018 into early 2019, we knew this wasn't just about real estate, that in order to have success long-term in this burgeoning sector, you needed to have three fundamental skill sets. One is you needed to understand real estate. It's the core of what we do. So of course, understanding real estate. Two is to understand cannabis. This industry is very regulated, very highly regulated, and also has a number of nuances, given each state has its own infrastructure. And so cannabis knowledge is really important to creating the duration on the portfolio and the performance that we've seen. And then also financial services experience. That's important, not just from a capital markets perspective, but we always knew that this industry wouldn't have a straight line to success, that there would be issues in the industry, and that the industry would experience restructurings. For sure, you have seen that over the last couple of years. Having folks inside the tent with that type of experience, we always knew would be very, very helpful. Aside from the core management team, we also have a very experienced board of directors, Gordon DuGan, who was CEO of W. P. Carey, one of the largest net lease REITs in the world, but also was CEO of Gramercy Property Trust. He has decades and decades of experience around real estate and specifically the net lease business. We are a net lease REIT. Alan Carr and Joyce also have restructuring. Joyce specifically has experience around cannabis, sitting on the board of one of the leading cannabis companies in the industry. We also have Pete Kadens on our board. Pete has been a very successful entrepreneur through his career, but notably within the cannabis sector. He was one of the co-founders of Green Thumb Industries, arguably one of the best-run companies in the cannabis industry. They just announced some terrific earnings yesterday. He was CEO there, took the company public, and retired from the company a couple of years ago. He's been on our board since inception and brings tremendous cannabis industry knowledge. David and Pete also bring significant real estate and financial services experience. That well-rounded experience has allowed us to build a national portfolio of properties. What I want to get to now is talking a little bit about the cannabis industry and understanding that this industry has grown significantly as we've seen states adopt medical cannabis programs and states convert from medical programs to adult use programs. In fact, when you look at some of one of the more prominent industry resources, BDSA, they're projecting significant growth for this industry over the next few years. The industry has been growing significantly, and we do expect it to continue. What's really driving that? Some stunning, stunning statistics, in my opinion. When you look at 90% of the U.S. population, this polling by Pew Research is consistent. They've been doing this for probably nearly a decade. 90% of the U.S. population believes that medical cannabis should be available to consumers. 52% of the population today resides in a state that has adult use cannabis available to them. You have probably two-thirds, if you look at another Gallup poll, polling close to 70% of Americans believe that cannabis should be available to anybody 21 and older. There are very few things politically in this country that we agree to, to the tune of 70%, but it is cannabis legalization. Stunningly, I think what maybe not surprising if you follow the industry, but 54% of Americans believe alcohol is more harmful than cannabis. On the right side of this page, you'll see how behavior for a younger cohort, they're shifting their consumption behavior a bit away from alcohol and into cannabis. We think that's a long-term trend that'll continue. That's part of what is underlying this growth in the industry. Some really exciting catalysts going on in the industry across all branches of government. In the administration section, the DEA, as reported last week, has signed off on a rescheduling of cannabis from Schedule I to Schedule III. That is significant. When it becomes public, when they put their notice of proposed rule out that we think will happen shortly, and that ultimately becomes a final rule, that is a momentous day for the cannabis industry and really is an affirmation of the fundamental thesis that we had that cannabis would be normalized over time and we believe ultimately legalized. And so that's an important first step in the federal government's recognition of cannabis and its ability to be used as medicine, but also we think this long-term trend towards legalization. The executive branch is doing its part. Within the legislative branch, recently we saw Senator Schumer and 17 other senators introduce legislation to legalize cannabis under the CAOA, the Cannabis Administration Opportunity Act. I don't actually believe this legislation has the votes to pass, but it is notable because it's just one of a long list of various legislation that has been introduced in the House and the Senate around cannabis, whether it be research, banking, legalization, decriminalization. There is significant movement on Capitol Hill, again, reaffirming this notion that it's just a matter of when, not if, you get cannabis normalization and legalization through the legislative branch. But the legal branch is also another place to look. David Boies, who is a very, very prominent lawyer who's argued in front of the Supreme Court in notable cases such as gay marriage, Gore v. Bush, and the Microsoft antitrust case, he has recently taken a case in the cannabis sector challenging the constitutionality of the Controlled Substances Act, using a previous Supreme Court ruling about 16 years ago against cannabis, using that to argue for the illegality for the CSA to regulate interstate commerce. And so with all of these state constructs. So it's a novel approach. We think it has significant traction. It'll take some time to play out. And then you also have various federal circuit courts coming out with conflicting rulings around gun rights for people who are consuming cannabis for medical purposes at the state level and losing their Second Amendment rights. So suffice to say, there's a lot going on across all three branches of government around cannabis, and we think it'll continue to fuel the acceptance for the acceptance of cannabis. And so let's quickly talk about our portfolio. I know I'm moving quickly. I'll open it up to Q&A in about five or six minutes. Again, 32 properties, 12 states, 13 tenants. Our tenants are some of the leading companies in the industry. Names like Curaleaf or Trulieve or Cresco, those are some of the more public names. We even have some of the leading private names, for instance, C3 Industries, which we announced yesterday, a new transaction in Connecticut. They are profitable after the onerous 280E taxes. And I should have mentioned one of the really important impacts of the DEA rescheduling cannabis from Schedule I to Schedule III is the elimination of an onerous taxation that only applies to folks that are operating in Schedule I and Schedule II drugs. Effectively, cannabis operators are suffering from an overtaxation that results in a tax rate that could be up to 50%-70%. And so by putting a normalized corporate rate on our tenant base, we estimate that our tenants can reduce their tax liability by over $500 million across the tenants. So that change to Schedule III creates an immediate credit improvement to the entire portfolio to the tune of over $500 million. I'm not aware of another REIT that has that type of credit catalyst from an administrative action. And so when I think about the add-on effect to that is with that improved cash flow, we do expect the equity valuations of that tenant base to be buoyed because those businesses have better cash flow. They'll be able to recapitalize their balance sheet, lower their cost of funding, further improving their free cash flow, and improving the credit quality of their companies, which inures to our benefit as the landlord. Quick comments around our underwriting approach. Three core tenets, which is around the tenant quality, the cannabis jurisdiction, and the real estate itself. Of course, tenant quality, we're going to look at the balance sheet. We're going to look at everything you would normally look at. But what's different here is understanding this management team's ability to run a high-growth business in a highly regulated industry. It's critically important in this cannabis industry. And when we look over the last 24 months, the groups that have gone out of business or have experienced the most difficulty are the groups that couldn't quite fit that screen. Cannabis jurisdictions, some may be wondering, why is this really relevant? Well, each state approaches cannabis in a slightly different way, and it typically tracks how they approach alcohol. So we like limited licensed jurisdictions where there is limited competition, creates a better margin for the tenant, but also creates intrinsic value for those licenses. And in fact, when you look at our portfolio and our concentration of these limited licensed jurisdictions, we think it's the cornerstone of what's enabled our portfolio to perform better than any of the competitors out there. And then, of course, strong real estate. We're not just looking at the real estate location and its alternative use value. We're also underwriting to the four-wall coverage or the EBITDA. This is the measure of cash flow that that property generates because we think that's the best measure of that property's ability to continue paying rent. Since we have a very long duration, we're doing 15-20-year leases. It's really important to underwrite and understand that those tenants have an ability to pay rent for the duration of that asset. I'm going to skip a couple of slides here so that we can get to one of my favorites, but quite frankly, not so favorite. Oh, you could see here, excuse me, the growth in our dividend growing from our IPO in 2021 and having recent growth in that dividend in Q4 and Q1. And so when you look at our dividend yield, people will tend to say, "Wow, when you have a dividend yield as a REIT that's higher than your peer set as much as ours are," they say, "Well, there's usually a problem with your leverage or there's a problem with your portfolio." And I think we could agree that you could see the chart in the lower left. It's not a leverage issue because we have virtually no leverage. We only have $4 million outstanding at the end of the first quarter on our $90 million portfolio with over $430 million of assets. It's clearly not a leverage issue, and our leverage is even attractively priced. So from quality of portfolio issue, you'll hopefully recall what I said. We're 100% leased. We've been collecting 100% of rent the last couple of quarters. And we have some of the leading operators, both public and private, in the sector. So it's not a portfolio issue. So Anthony, why is it that you're trading at such a discount to your peers? That's rooted in the fact that we are traded on the OTC, and custody is limited right now for us for NewLake. So why are we traded on the OTC? We operate the company to qualify with all requirements to be listed on New York and NASDAQ. It's just that we're violating the Controlled Substances Act in having our entire tenant base be focused in the cannabis sector. There is one competitor that was able to get onto a major exchange. They were able to get on while there was a loophole, something called the Cole Memo. They utilized that to get acceptance onto the exchange. When that Cole Memo was rescinded by the Trump administration in 2018, that loophole closed, and so that's not available to us today. So again, we run our business from a governance perspective to qualify with all requirements for New York and NASDAQ other than what our tenant base is involved in, and that's the cannabis sector. So we are looking for opportunities to get uplisted. Perhaps it comes from some of the catalysts. Is it an accumulation of a SAFE Banking Act that has a safe harbor for exchanges, plus a Schedule III or a new Cole Memo? We're evaluating all there. As I'd caution, nobody should be making an investment based on those regulatory changes. But whether it's that or looking for an uplisting to the TSX, which is something that we talk about on our earnings calls, those are opportunities for us to unlock that custody because custody for the OTC company like us is very limited right now. Unlocking that custody unlocks what we believe to be significant demand from institutional investors to be able to step into our name and step into a quality portfolio of diversified cannabis real estate that's managed by a professional organization. And so I know I ran through a lot with that. We'll open it up for Q&A. James, over to you. Thank you, Anthony. Excellent presentation. As you just said, we're going to open up the Q&A portion now. If anybody has a question, please unmute your microphone, or you can put a question below in the chat box. Good morning, James. I'd like to just ask a quick question. Anthony, if the SAFE Banking Act passes, some of these regulatory hurdles come down, obviously that opens up financing sources for these cannabis companies. Wouldn't that hurt you in the sense that why do they need to do, say, sale-leasebacks when they can just go get a bank loan or something? Could you just address that? For sure. And thank you for the question because it's an important one. And people have this perspective that once there's this safe harbor, banks will rush in. We don't see that at all. And in fact, we see that we will be able to lower our cost of capital by accessing banks more readily than the industry will. And let me explain my views for a moment. First, we think banks won't move until the rules are set. And if you look at the most recent version versus previous versions, one of the key changes is this time period for regulators to write the rules. They went from six months for regulators to write the rules to a year for regulators to write the rules. And I could tell you, having been in banking in my background, I spent nearly 15 minutes at JPMorgan as a banker. Banks are reticent to move until the rules are set. So I think for a year, minimum, it'll take the regulators to write the rules. Ultimately, when the rules are written and banks are ready to step in, I think they're going to be more apt to provide capital to a diversified portfolio of professionally managed commercial real estate rather than go directly to the operators and just look at what's happened. Look, we have a $90 million credit facility versus many of the large operators don't even have a credit facility from the banks that focus on the sector. We think we end up getting capital from those banks first, lowers our cost of capital, and allows us to execute more transactions and be more competitive over time. Great. That's very helpful. Thank you. I'm sure it felt like 15 minutes. At times. All right. We'll give it a minute if there's any further questions. If not, people can always reach out to you direct after today. Sure. Very happy to have folks reach out. I would circle back while we're waiting for potentially another question. The DEA's announcement of their notice of proposed rule, which is expected in a couple of days, it was leaked by the AP, confirmed by the Department of Justice last week that it's sitting with OMB, and then will get published in the Federal Register. That really is a sea change for the industry. And when you think about the catalyst for improving the cash flow profile of everybody across the industry, the ability to track some incremental capital, it really will improve the credit quality. And I know I said we've been receiving 100% of rent, but anything that improves the credit quality of a tenant portfolio should improve the valuation for NewLake. The other thing I'd say is the thesis for our business when we first started NewLake was really akin to if you looked at the data center REITs from the late 1990s, early 2000s, you would see that they were executing cap rates in the low to mid-teens, similar to what we've been doing over the last five years. The industry was not really tracked very well, was a little misunderstood, and equity investors valued those cash flows at an implied cap rate that was in the low to mid-teens. I think you see similar to what's going on here. But as that industry normalized, then you saw the equity capital markets value those cash flows more akin to what a traditional net lease rate or a traditional equity valuation would be. You'd see it was valuing those cash flows at a 6 cap or a 7 cap. You could even see where those cap rates are today in that 6-7 range has gotten as low as 5. So if you take our cap rate, our effective cap rate today, which is somewhere around 12%, and just say that the market places a valuation on our net operating income at a 10 cap or an 8 cap, in addition to the quality dividend that you're going to receive, you'll be able to benefit from that increased valuation that'll happen, we think, over time. And so that's a key part to the valuation, we think, the opportunity for investors. Excellent. Thank you. We've got one last question. If you could just answer this for us in about a minute or two timeframe. What is the implication of going from Schedule I to Schedule III controlled substance for your company? Yeah, it is entirely about the savings of 280E taxes or the elimination of 280E for our tenant base. It does not legalize cannabis across the land. What it does is it puts it on a different schedule and moves it to a construct where if companies want to sell a Schedule III drug, they can go and get registered with the FDA. We don't actually see most of the cannabis industry doing it. So the key benefit is eliminating the 280E taxation and unlocking that over $500 million of additional cash flow for our entire tenant base. It really re-rates from a credit quality our tenant base initially and then could lead to the knock-on effect and the further improvement in the credit quality of our tenant base as their equity valuations are buoyed from that improvement in cash flow, and they recapitalize the balance sheets, getting that second derivation of credit quality improvement. Excellent. Well, that concludes the presentation today for NewLake Capital Partners. Anthony, thank you for your participation. We look forward to keeping an eye on your company for the rest of 2024. Great. Thank you so much for having us. If anybody has any follow-up questions, you could find us at newlake.com, or the contact information is in all of our materials and on our website. Thank you so much. Bye-bye. Bye-bye. The recording has stopped. We are going to take a couple of minutes break, and we will be back at 2:00 P.M. with logic.